788 F.

2d 472

Telina NELSON, a minor, by George A. SENTENEY,

Guardian ad
Litem, Gerald Nelson and Sherry Nelson, Plaintiffs,
v.
F.W. WOOLWORTH COMPANY and Travelers Insurance
Company,
Defendants-Third Party Plaintiffs-Appellants,
and
Bunnan Tong and Company, Ltd., Third Party DefendantAppellee.
No. 85-1654.

United States Court of Appeals,

Seventh Circuit.
Argued Dec. 9, 1985.
Decided April 25, 1986.

Frank L. Steeves, Milwaukee, Wis., for defendant-third party plaintiffsappellants.

Barrett J. Corneille, Bell Metzner & Gierhart, S.C., Madison, Wis., for
third party defendant-appellee.
Before BAUER, CUDAHY and FLAUM, Circuit Judges.
CUDAHY, Circuit Judge.

F.W. Woolworth Co. ("Woolworth") ordered a shirt through Bunnan Tong Co.
("Bunnan Tong") that ignited and injured one of the plaintiffs. This diversity
case concerns whether Woolworth or Bunnan Tong should bear the costs of
settlement for those injuries. The District Court for the Western District of
Wisconsin found that Bunnan Tong was not liable for any of the plaintiffs'
claims against Woolworth. Woolworth appeals, contending that the district
court ignored the indemnity agreement between the parties. We affirm.

On October 28, 1978, four-year-old Telina Nelson was severely injured when
she ignited a flannel shirt she was wearing with a butane lighter. The shirt had
been purchased from defendant-third party plaintiff-appellant F.W. Woolworth
Co. at its Rice Lake, Wisconsin store. The shirt was manufactured in Hong
Kong. Bunnan Tong was Woolworth's purchasing agent in Hong Kong and had
helped Woolworth secure a manufacturer there. The two companies had done
business for over 40 years.

Telina Nelson's shirt was one of 4,000 dozen that Woolworth had ordered
through Bunnan Tong in 1976. As part of that deal Woolworth had sent its
buying representative to Hong Kong to select the fabric and arrange for the
specifications, such as the labeling and packaging of the shirts. Woolworth's
specifications also required that two sample shirts be sent to the United States
for testing for compliance with federal and company flammability
requirements. The shirts were found in compliance.

The 1966 contract between Woolworth and Bunnan Tong, which was renewed
in 1976, contained an indemnity provision which specified that Bunnan Tong:

5 agree[s] to stand behind all of the merchandise which you [Bunnan Tong] have
...
furnished to us [Woolworth], which you are now furnishing to us, or which you may
furnish to us--at any future date--and you agree that you will hold us harmless in
regard to any claims, which may be made against us--by anyone involving this
merchandise, or its sale by us, except for any claims arising from fault or negligence
on our [Woolworth's] part.
6

In addition, the 1976 purchase order contained a second indemnification clause

which provided:

7 accepting this order, shipper (or seller) agrees to indemnify, save harmless and
In
defend F.W. Woolworth Company against any claim or action involving this
merchandise or arising out of its sale or possession by F.W. Woolworth Company
and against any loss or damage or expense incurred by F.W. Woolworth Company in
connection therewith.
8

In June 1982, Nelson through her guardian brought suit against Woolworth and
Bunnan Tong, along with Park Industries, Inc., the manufacturer of the butane
lighter, and United Garment Manufacturing Company, the manufacturer of the
shirt. The suit alleged that both the lighter and the shirt were made with design
defects that made the products unreasonably dangerous. Woolworth filed a
cross-claim against Bunnan Tong and asked Bunnan Tong to assume its
defense pursuant to the indemnity agreement. Although making no allegations

of Woolworth's negligence, Bunnan Tong refused.

9

Bunnan Tong also refused two later tenders of Woolworth's defense.

Woolworth eventually settled with plaintiffs for $1.3 million, while Bunnan
Tong settled for $7,500. Woolworth continued to try to recoup the amount of
the settlement and costs from Bunnan Tong. Woolworth moved for summary
judgment. The district court denied this motion because Bunnan Tong
contended that the fact of Woolworth's possible negligence remained in dispute.
At the time the motion was made, Bunnan Tong argued before the court that,
"To the extent that it is found that the certain garment was not in compliance
with local standards for flame retarded garments, then F.W. Woolworth must
share some of the blame with the parents." (Excerpts from November 14, 1984
hearing, Appellants' Appendix at 144).

10

The case eventually went to a bench trial. Woolworth presented two fabric
experts who testified that the flannel met stringent national and company
standards. Bunnan Tong presented no independent testimony of its own but
offered a deposition summary of plaintiffs' expert, Robert Johnson, who stated
that the product was unsafe and failed to provide adequate warning of its
flammability.

11

The court found for Bunnan Tong. In reaching its conclusion, the court noted
that Johnson's deposition illustrated how Woolworth might potentially have
been at fault. Johnson had stated, inter alia, that the shirt burned with intense
heat and flame, was difficult to extinguish, did not contain available flame
retardants, and carried no warning label. Thus, the court held that "the potential
liability to the plaintiffs faced by Woolworth flowed from its conduct and its
conduct alone."

12

Noting that the indemnity provision governs unless Woolworth is negligent and
arguing that no finding of negligence was ever made, Woolworth asks this
court to reverse the district court's ruling. We find the district court's finding
supportable as well as fair in light of the evidence before it and therefore
affirm.

I.
13

Looking solely at the indemnity provisions in the buying agreement and

purchase order, Woolworth contends that "BUNNAN TONG did not agree to
indemnify WOOLWORTH simply for claims caused by BUNNAN TONG.
BUNNAN TONG agreed to hold harmless and defend WOOLWORTH from

any claims from anyone involving any aspect of the merchandise as long as
they were not caused by WOOLWORTH'S negligence." (Appellant's Brief at
25-26). Woolworth also argues that in agreeing to these provisions, Bunnan
Tong assumed the burden for paying for claims unless it could prove
Woolworth's fault or negligence. While Bunnan Tong told the court that
Woolworth may have shared the blame with Telina Nelson's parents for her
injuries, Woolworth notes that Bunnan Tong offered no independent testimony
demonstrating fault. Therefore, Woolworth concludes, its summary judgment
motion was, in essence, unopposed and should have been granted by the
District Court. Moreover, to the extent that the court made any findings of fact
against the company, Woolworth believes these were clearly erroneous.
14

Summary judgment is, of course, addressed to the discretion of the court. See
McLain v. Meier, 612 F.2d 349, 356 (8th Cir.1979), and the trial court is given
wide latitude in determining whether entry of summary judgment in a particular
situation is appropriate. See Fine v. City of New York, 71 F.R.D. 374
(S.D.N.Y.1976). Therefore, it was within the court's power to deny appellant's
motion and allow the issues to be further developed at trial.

15

Nor do we find the trial court's ultimate determinations to be clearly erroneous.

Woolworth points to one clause in the purchase order and buying agreement
and concludes that the intention was plain that Bunnan Tong would indemnify
unless it could show that Woolworth was at fault or negligent.

16

Under the applicable Wisconsin law, parties may certainly negotiate indemnity
agreements. See Dykstra v. Arthur G. McKee & Co., 92 Wis.2d 17, 284
N.W.2d 692 (1979). In construing such agreements, the language of the
contract is an important tool. See Matter of Watertown Tractor & Equipment
Co., Inc., 94 Wis.2d 622, 637-38, 289 N.W.2d 288, 295 (1980). But to look at
the language of the contract does not mean only to examine the language of one
provision. Rather, the entire contract must be considered, together with the
relationship between the parties.

17

In looking at the buying agreement as a whole, it becomes clear that Bunnan

Tong did not intend to assume responsibility for judgments for damages (or
settlements in lieu of judgments) attributable to Woolworth's conduct. In clause
1(d) of the contract, Bunnan Tong agreed to conform to all Woolworth's
specifications, to meet United States' standards and to arrange for safe
packaging. (See Appellants' Appendix, at pp. 101-05). In clause 1(f), Bunnan
Tong agreed to assume the burden of negotiating with the manufacturer for any
defective merchandise, even for defects found after Woolworth's receipt and
resale. The indemnity provision discussing Bunnan Tong's liability for all

claims except those arising from Woolworth's fault or negligence came next.
Later clauses established shipping terms and required Bunnan Tong to find a
reputable manufacturer who would adhere to Woolworth's specifications.
18

The contract as a whole suggests that Bunnan Tong expected to be responsible

for its own conduct. It also suggests that Bunnan Tong agreed to assume
responsibility for certain third parties' actions, such as the manufacturer's or
shipper's. The only provision that discusses Bunnan Tong's responsibility for
Woolworth's conduct is the clause stating that Bunnan Tong would not be
liable for Woolworth's fault or negligence.

19

Bunnan Tong had to perform to Woolworth's specifications. Had it not, it

would have been liable for breach of contract. It is unlikely that it also intended
to assume any costs caused by adhering to these specifications. After all,
Bunnan Tong is a relatively small, foreign purchasing agent, not Woolworth's
insurance company or underwriter.

20

Bunnan Tong performed its tasks as required. Nothing in the record suggests
that Bunnan Tong in any way deviated from Woolworth's specifications. The
decisions that ultimately led to Telina Nelson's injuries were made exclusively
by Woolworth. Woolworth selected the fabric and determined that it would be
manufactured without flame retardants. Woolworth decided to market the shirts
without a label warning of flammability. The shirt was sold at a Woolworth
store. In fact, Woolworth drafted the clause that it now says binds Bunnan
Tong. Under these circumstances, we do not believe that it was Bunnan Tong's
obligation to conclusively demonstrate Woolworth's fault or negligence nor was
it Bunnan Tong's responsibility to pay for conduct over which it had no control.

21

The district court opinion is therefore AFFIRMED.